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U.S. Borrowing Needs Exceed Prior Forecasts as Budget Gap Widens

(Bloomberg) -- The U.S. Treasury Department indicated that the government’s borrowing needs are rising faster than previous estimates as the Trump administration finances a widening budget deficit.

The department expects to issue $365 billion in net marketable debt from January through March, up $8 billion from its estimate in October, according to a statement released Monday in Washington. The Treasury sees an end-of-March cash balance of $320 billion, unchanged from its forecast three months ago.

In its first estimate of the April-June period this year, the department estimated borrowing of $83 billion, $11 billion more than in the same period last year and the most for that quarter since 2012.

From October through December, the Treasury said it issued $426 billion in net marketable debt, almost in line with its earlier prediction of $425 billion in borrowing. The cash balance was $402 billion at the end of December.

The Treasury is boosting sales of bills, notes and bonds to help finance a budget gap that’s widening after $1.5 trillion in tax cuts started taking effect last year, and the then-Republican-controlled Congress approved a roughly $300 billion spending increase. At the same time, an aging population is boosting costs of federal programs such as Medicare.

Earlier on Monday, the Congressional Budget Office said the deficit is forecast to widen to $897 billion over the 12 months through September, from $779 billion last year. The CBO sees the shortfall topping $1 trillion in fiscal 2022, two years later than its forecast in April.

The last time the U.S. ran a budget gap larger than $1 trillion was between 2009 and 2012 when the Obama administration was unleashing a bailout for the financial markets and a stimulus plan to help the economy heal from the worst recession since the Great Depression.

The quarterly borrowing estimates released Monday precede the department’s refunding announcement set for Wednesday, when the sizes of longer-term debt auctions are announced.